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Christmas Wrap

As we head towards the end of another year, we look back on what has been an action packed year across the globe.

China had the 19th Communist Party 5 year convention (although there is nothing left that is Communist other than the single party system) and Xi Jinping consolidated his power, Trump keeps tweeting away, North Korea keeps testing missiles, Brexit talks continue and the constant voice of reason, Angela Merkel might also be going back to the polls in Germany, as she suffers the fallout from her open borders refugee policy. Australia, is struggling to find anyone to hold parliamentary positions that has no ancestors born overseas. Same sex marriage is about to become a reality and assisted dying will become law in Victoria.

There are ideological battles being fought across the world and it seems that we only hear the views of the extremes at either end of the scale. Maybe we can get a lot more done with a pragmatic government, who looks at each situation on its merits?

Governments should govern for all the people. Too much time and effort is being taken up catering to extremes on both sides, rather than the majority, that sit in the middle, who are far more reasonable and open to compromise. We have endless debate on issues where there is already broad community support for one option, while no one seems to have any plans for the future. The rise and rise of technology, in particular robotics and artificial intelligence may be the biggest change societies have seen for many years and it is not even being discussed.

It would be wonderful to see some bi partisan behaviour. Combative politics and ideological battles, produce very little of value.

Fortunately, the global economy looks on solid footing, with growing profits and confidence as we head into the end of 2017. This time, Australia may be the negative outlier, not the lucky country. With a big uptick in infrastructure spending and the drag from the winding down of the mining investment boom coming to an end, we could get lucky again and gradually pull ourselves out of the mountain of debt. However, our world leading personal debt levels are constraining consumption and leaving the economy vulnerable to any shocks. With little ability to use monetary policy (lower interest rates), this is a risk that must be addressed via the asset allocation of your investment portfolio.


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